Bolsonaro Scraps Plans for Social Program Amid Budget Woes

(Bloomberg) -- President Jair Bolsonaro abandoned plans to launch his signature social program, the so-called Brazil Income, given the challenges in financing it without breaching the country’s fiscal responsibility rules.

Visibly irritated by media reports saying his government was considering reducing other social spending to fund the new program, Bolsonaro said the new plan is now on hold and that Brazil’s existing minimum income policies would remain in place.

“Until 2022, in my government, it’s forbidden to mention the words Brazil Income,” the president said about the program in a video posted on social media on Tuesday. “We’ll continue with Bolsa Familia. And period,” he added, referring to the widely-praised social program launched by leftist President Luiz Inacio Lula da Silva 17 years ago.

Finding funds for Brazil Income has become a big headache for Bolsonaro after he rejected Economy Minister Paulo Guedes’ strategy to finance the program by redirecting money away from other social initiatives. At the same time, the president is under political pressure to come up with alternatives to replace the cash handouts given out during the pandemic.

Despite Bolsonaro’s order to bury Renda Brasil, the economic team will keep working on a solution to replace the cash handouts given out during the pandemic, said four people with knowledge of the matter. The Economy Ministry knows there will be pressure from the president himself to find a way to keep the support he got with the emergency payments in the last few months, the people said, asking not to be named because the matter is not public. The payment of monthly stipends, which are set to expire by year-end, have contributed to lowering the country’s poverty rate and boosting Bolsonaro’s popularity to an all-time high, even as the coronavirus’ death toll continues to rise and the economy crashes.

The Economy Ministry declined to comment.

Read More: Brazil’s 2021 Budget Has No Money for Bolsonaro’s Social Program

Blame Game

Discussions about Brazil Income have also been suspended in the citizenship ministry headed by Onyx Lorenzoni, according to two government officials familiar with the matter. He is currently responsible for managing Bolsa Familia and according to the officials, who asked not to be named while discussing internal government affairs, Lorenzoni is upset with his economy ministry colleagues, who he blames for Bolsonaro’s decision.

The Citizenship Ministry said in a statement that it “follows all decisions of Brazil’s Presidency.” Lorenzoni did not respond to a request for comment.

Guedes, in turn, blamed the press for misunderstanding his team’s proposal to limit mandatory expenses, some of which impacted health and social programs, to make room for Brazil Income in the federal budget.

“The idea was never to take from the poor to give to the poorest,” Guedes said at an online event Tuesday. “There was a false narrative.”

Guedes is now considering replacing Special Finance Secretary Waldery Rodrigues, the source of the news articles criticized by Bolsonaro, according to four people with knowledge of the matter said. The Economy Ministry declined to comment on any staff changes.

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